HB49 FY State Budget Analysis. Overview of Proposed Changes Impacting County Boards of DD

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1 Serving People with Developmental Disabilities 73. E. Wilson Bridge Road, Suite B-1 Worthington, OH Last Updated: March 23, 2017 HB49 FY State Budget Analysis Overview of s Impacting County On January 30, 2017, Ohio Governor John Kasich released his proposed state budget for the fiscal biennium. The proposed budget, which includes detailed spending proposals for all executive departments of the Ohio government, includes numerous provisions that could affect the operations of county boards of developmental disabilities. These provisions are contained in sections of the budget related to the Ohio Department of Developmental Disabilities (DODD), the Ohio Department of Medicaid (ODM), the Ohio Department of Taxation, the Ohio Department of Education (ODE), and the Ohio Department of Job and Family Services (JFS). The following summary tables include provisions pertinent to county boards of DD. Information in the Change column has been reproduced directly from the Ohio Legislative Service Commission s official budget summary. This verbiage was not authored by OACB staff. Information in the Impact column was composed by OACB staff and reflects the association s analysis of the as-introduced biennial budget bill (HB49). Proposed changes are listed below by department. Detailed budget provisions for specific departments and other entities begin on the following pages: Ohio Department of Developmental Disabilities (DODD) Page 2 Ohio Department of Medicaid (ODM) Page 15 Ohio Department of Taxation (ODT) Page 17 Ohio Department of Education (ODE) Page 20 Ohio Department of Job and Family Services (JFS) Page 21 Ohio Department of Health (ODH) Page 22 Opportunities for Ohioans with Disabilities (OOD) Page 25 Local Governments Page 25 Page 1 of 25

2 Ohio Department of Developmental Disabilities (DODD) Funding Recommendation for Fiscal Years 2018 and 2019 General Revenue Fund (GRF): Funding for fiscal year 2018 is $681.6 million (a 3.3% increase from fiscal year 2017). Funding for fiscal year 2019 is $700.7 million (a 2.8% increase from fiscal year 2018). All Funds: Funding for fiscal year 2018 is $2.9 billion (or a 5.3% increase from fiscal year 2017). Funding for fiscal year 2019 is $3.0 billion (or a 3.9% increase from fiscal year 2018). Executive Recommendations Will Fund the Following Objectives Increase the number of total waivers over the biennium; Provide subsidy funds to 88 county boards of developmental disabilities, which serve approximately 94,000 people with developmental disabilities; Provide funding for residential support services, 24-hour care, behavioral supports, crisis intervention and stabilization, therapy, and medical services for people living in state developmental centers; Provide funding for the Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID) program, serving approximately 5,500 people with developmental disabilities; and Increase wages for homemaker personal care direct support staff. DODD Budget Details (DODD) Use of community adult facility sale proceeds (ORC ) OACB Policy Priority Use of community early childhood facility sale proceeds (ORC ) OACB Policy Priority Permits a county board of DD or county commissioners to use the proceeds from the sale of a community adult facility to renovate or make accessible housing for people with developmental disabilities. This provision defines renovation as restoring a building to an acceptable condition for use by people with developmental disabilities. Restoration can include modernizing structural, mechanical, and electrical systems. It does not include maintenance, repairs, and replacements due to normal use. This provision also clarifies that the DODD director may establish a deadline for which the county shall use the sales proceeds. This change closely mirrors that proposed for ORC but permits a county board of DD or county commissioners to use the proceeds from the sale of a community early childhood facility to renovate or make accessible housing for people with developmental disabilities. Would allow county boards to use proceeds from the sale of adult facilities for upgrading housing for people with developmental disabilities. Currently, such funds can only be applied to building new housing. This provision would give boards a new tool with which to meet increased demand for communitybased housing. OACB Stance: Support Would apply the same policy change described above to proceeds from the sale of early childhood facilities, giving boards yet another tool with which to meet increasing demand for community-based housing. OACB Stance: Support Page 2 of 25

3 (DODD) Non-federal share of Medicaid expenditures for ICFs/IID (ORC ) OACB Policy Priority This provision would require a county board of DD to pay the nonfederal share of Medicaid expenditures for all people who have been involuntarily committed to a state-operated ICF as opposed to only paying the non-federal share for people who are receiving supported living or home- and community-based services funded by the county board and are involuntarily committed. This provision would also repeal exemptions to the requirement when the county board begins funding supported living or homeand community-based services within 90 days of commitment to the ICF. The provision adds an exemption if the county board, within 180 days of commitment, arranges for alternative services and discharges the person from the ICF.* This provision could mean a potential increase in costs for county boards to pay for the non-federal share for all people served who are involuntarily committed to a state developmental center. However, DODD has stated that the number of people that fall into this category is very low. Furthermore, because of the 180-day exemption, the overall impact would be minimal and could potentially reduce costs for county boards of DD. OACB Stance: Oppose * Updated March 23, 2017 OACB is seeking additional information on the 180-day aspect of this proposal, which may change the association s stance. Members will be informed if OACB changes its Page 3 of 25

4 (DODD) Medicaid rates for homemaker/ personal care services (Section ) Developmental centers (Section ) Innovative pilot projects (Section ) The bill requires that the total Medicaid payment rate for each 15 minutes of routine homemaker/personal care services provided to a qualifying enrollee of the IO waiver be $0.52 higher than the rate for services that a Medicaid provider provides to an enrollee who is not a qualifying enrollee. The higher rate is to be paid only for the first 12 months, consecutive or otherwise, that the provider provides the services to the qualifying enrollee during the period beginning July 1, 2017, and ending June 30, An IO enrollee is a qualified enrollee for the purpose of this provision if all of the following apply: 1) The enrollee resided in a DC, converted ICF, or public hospital immediately before enrolling in the IO waiver. 2) The enrollee did not receive before July 1, 2011, routine homemaker/personal care services from the Medicaid provider that is to receive the higher Medicaid rate. 3) The DD director has determined that the enrollee s special circumstances warrant paying the higher Medicaid rate. The bill permits a DC to provide services to persons with DD living in the community or to providers of services to these persons. The Department is permitted to develop a method for recovery of all costs associated with the provision of the services. A carryover from the last two budgets, for FY2018 and FY2019, the bill permits the DODD director to authorize the continuation or implementation of innovative pilot projects that are likely to assist in promoting the objectives of state law governing DODD and county boards of developmental disabilities, when certain circumstances apply. County Boards are actively engaged in providing training and supports for direct support professionals (DSPs). Boards have a vested interest in building provider capacity and reducing turnover of DSPs. OACB Stance: Support Continues the state policy of downsizing institutional settings. However, it s unclear how DODD would recover costs given that the state is responsible for funding DCs. OACB Stance: Oppose Pilot projects are an important tool for promoting a range of options in areas such as community integration. OACB Stance: Support Page 4 of 25

5 (DODD) Employment First Initiative (Section ) A carryover from the past two budgets, this provision requires: 1) Employment First funding to be used to increase employment opportunities for individuals with DD through the existing Employment First Initiative. 2) Requires the DODD director in each fiscal year to transfer from general revenue fund monies to the Opportunities for Ohioans with Disabilities Agency (OOD) an amount agreed upon by the DODD director and the OOD executive director to support the Employment First Initiative and requires that the transfer be made via an intrastate transfer voucher. 3) Requires OOD to use the funds transferred as state matching funds to obtain available federal grant dollars for vocational rehabilitation services, and requires that any federal match dollars received by OOD be used for the initiative. 4) Requires the DODD director and the OOD executive director to enter into an inter=agency agreement that will specify the responsibilities of each agency under the initiative, and specifies that OOD must retain responsibility for eligibility determination, order of selection, plan approval, plan amendment, and release of vendor payments. 5) Requires that the remainder of GRF appropriation item be used to develop a long term, sustainable system that places individuals with DD in community employment. While not detailed in the budget language, because of the agreement made during the funding redesign process, DODD will pay for the behavioral addon for adult day and employment services through the Employment First line item. DODD is anticipating this could cost $3 million per year, roughly half of the Employment First budget. This limits what else can be funded through the Employment First budget. Much of what is remaining in that line will be allocated to OOD to fund the Employment First Partnership between DODD and OOD. Considering that funding the behavioral add-on was a concession to county boards, they would not have to supply the match for this add-on, which at $0.63 per unit is the most expensive of the rate modifications in the new service package. At this time, county boards are in a difficult position to suggest these funds should be allocated differently. OACB Stance: Support Page 5 of 25

6 (DODD) Change in grouper methodology classifications (ORC ) Use of county subsidies to pay non-federal share of ICF/IID services (Section ) Updating statute citations (Section ) Continuing law requires DODD to establish a grouper methodology to be used when determining case-mix scores for ICFs. DODD has established the chronic behaviors and typical adaptive needs classification and the typical adaptive needs and non-significant behaviors classification. In an upcoming rule change, DODD will remove both of those classifications from the grouper methodology and add the infrequent need for assistance classification. To reflect this change, the bill repeals provisions that reference the chronic behaviors and typical adaptive needs classification or the typical adaptive needs and non-significant behaviors classification, including a provision establishing the Medicaid payment rate for ICF services provided Medicaid recipients who have been placed in those classifications. The bill adds a provision specifying that the maximum Medicaid payment rate for services provided by an ICF in peer group 1 or peer group 2 to a Medicaid recipient placed in the infrequent need for assistance classification is $ per Medicaid day. A carryover from the last two budgets, the bill requires the DODD director to pay the non-federal share of a claim for ICF services using funds otherwise appropriated for subsidies to county boards of DD if: 1) Medicaid covers the services; 2) The ICF services are provided to a Medicaid recipient who is eligible for the services and the recipient does not occupy a bed that used to be included in the Medicaid-certified capacity of another ICF certified by the director of health before June 1, 2003; 3) The services are provided by an ICF whose Medicaid certification by the director of health was initiated or supported by a county board; 4) The provider of the services has a valid Medicaid provider agreement for the services for the time that the services are provided. A carryover from the last two budgets, this provision provides that the DODD director is not required to amend any rule for the sole purpose of updating the citation in the Ohio Administrative Code to its authorizing Ohio Revised Code section. This is a carryover from the last two budgets. For that reason, this provision has no new impact to county boards of DD. OACB Stance: Need more information to determine impact. This is continuing law and is unlikely to have new impacts on county boards. Page 6 of 25

7 (DODD) Medicaid rates for ICFs/IID in peer groups 1 and 2 for FY18 (Section ) Medicaid payment rates new ICFs/IID (ORC ) Ventilatordependent ICF/ IID residents (ORC ) As introduced, the bill requires DODD to modify the formula used in determining the FY18 Medicaid payment rates for ICFs in peer groups 1 and 2. One set of modifications applies to existing ICFs while another set of modifications applies to new ICFs for which initial provider agreements are obtained during FY18. The bill permits DODD to increase the Medicaid rate through the rate reconsideration process if the ICF s most recent quarterly casemix score is at least 25% greater than its case-mix score for the immediately preceding calendar quarter. A new ICF s rate is to be adjusted as follows: 6) The initial rate for capital costs is to equal the median rate for the new ICF/IID s peer group for FY ) The initial rate for direct care costs is to be determined as follows: The median of the costs per case-mix units is to be determined for each peer group. The median determined above for its peer group is to be multiplied by the median annual average case-mix score for its peer group for calendar year The product determined above is to be multiplied by ) The initial rate for indirect care costs is to be $68.98 if it is in peer group 1 or $59.60 if it is in peer group 2. 9) The initial rate for other protected costs is to be the median FY 2017 rate determined for existing ICFs/IID multiplied by Effective July 1, 2018, the bill modifies the calculation of the initial Medicaid payment rates for new ICFs. The calculation for the initial rates for new ICFs in peer groups 1, 2, 3, and 4 are the same as the calculations in current law for new ICFs in peer groups 1 and 2, except that the initial rate for capital is to be the median rate for the new ICF s peer group. For a new ICF in peer group 5, the initial rates for capital, direct care costs, indirect care costs, and other protected costs will be the median of each of those rates for ICFs in peer group 5. This provision would eliminate the requirement that a resident of an ICF be under age 22 to qualify for outlier services, thus allowing residents older than 22 to receive reimbursement for the use of ventilators. In FY 2018, the payment rates will remain unchanged. In FY 2019, the provision will result in an increase of 2.5% in total costs ($13.5 million all funds; $5.1 million state share) related to the adoption of a new reimbursement methodology. Provides continuity of care for ICF residents who require ventilators. OACB Stance: Support Page 7 of 25

8 (DODD) ICFs/IID s Medicaid rates for direct care costs (ORC ) ICFs/IID s Medicaid rates for indirect care costs (ORC ) Under the bill, direct care costs are part of an ICF s costs that are used in determining the facility s total Medicaid payment rate. Continuing law requires DODD to determine an ICF s cost per case-mix unit as part of the process of determining the facility s Medicaid payment rate for direct care costs. As part of that determination, DODD must set the maximum cost per case-mix unit for ICFs in each peer group. Effective July 1, 2018, for an ICF in peer group 1, 2, 3, or 4, DODD must set the maximum cost per case-mix unit at 7% above the ICF s peer group s median cost per case-mix unit for the calendar year immediately preceding the fiscal year in which the rate is to be paid. For an ICF in peer group 5, the maximum cost per case-mix unit is to be set at the 95th percentile of all ICFs in the peer group. Under the bill, the maximum rate for indirect care costs for each ICF in peer group 1 must be at least 3.5% above the median indirect care cost for all facilities in peer group 1 for the calendar year immediately preceding the fiscal year in which the rate will be paid, adjusted for inflation. The maximum rate for an ICF in peer group 2, 3, 4, or 5 must be at least 7% above the median indirect care cost for all facilities in the ICF s peer group, adjusted for inflation. When calculating the median indirect care costs for the peer groups, ICFs whose indirect care costs are more than three standard deviations from the mean are excluded. The bill also modifies the formulas used to determine the maximum efficiency incentive used in calculating an ICF s indirect care costs payment rate. During FY19, if the provider of an ICF in peer group 1 or 2 obtains approval to become a downsized or partially converted ICF and the approval is conditioned on the downsizing or conversion being completed not later than July 1, 2018, the maximum efficiency incentive for the ICF is to be 2.5% of the maximum rate for indirect care costs for the ICF s peer group. Otherwise, the maximum efficiency incentive is to be 1.25% of the maximum rate for indirect care costs for the ICF s peer group. For FY 2020 and thereafter, the maximum efficiency incentive for an ICF in peer group 1 or 2 is to be 2.5% of the maximum rate for indirect care costs for the facility s peer group. For FY19 and thereafter, the maximum efficiency incentive for an ICF in peer group 3 is to be 2.5% of the maximum rate for indirect care costs for facilities in peer group 3. The maximum efficiency incentive for an ICF in peer group 4 or 5 is to be 5% of the maximum rate for indirect care costs for the ICF s peer group. Page 8 of 25

9 (DODD) Rate reduction if franchise permit fee is reduced or eliminated (Section ) Combined maximum payment limits for peer group 2 (Repealed ORC ; conforming changes in ORC and ) Peer group designation (ORC ; conforming changes in numerous other ORC sections) The bill requires DODD, if the Centers for Medicare and Medicaid Services (CMS) requires that the ICF franchise permit fee be reduced or eliminated, to reduce the amount it pays ICFs in peer groups 1 and 2 for FY18 as necessary to reflect the loss to the state of the revenue from the franchise permit fee. The bill repeals a provision permitting the DODD director to adopt rules providing for the determination of a combined maximum payment limit for indirect care costs and costs of ownership for ICFs in peer group 2. Effective July 1, 2018, the bill modifies the categorization of ICFs into peer groups by increasing the number of peer groups to five (from three). Under these changes, peer group 1 consists of facilities with a Medicaid-certified capacity exceeding 16. Peer group 2 consists of facilities with a Medicaid-certified capacity between 9 and 16. Peer group 3 consists of facilities with a Medicaid-certified capacity of eight. Peer group 4 consists of facilities with a Medicaid-certified capacity not exceeding seven, other than ICFs in peer group 5. Peer group 5 consists of ICFs: 1) That are first certified after July 1, 2014; 2) That have a Medicaid-certified capacity not exceeding six; 3) That have contracts with DODD that are for 15 years and include a provision for DODD to approve all admissions and discharges; and 4) Whose residents are admitted directly from a DC or have been determined by DODD to be at risk of admission to a DC. Page 9 of 25

10 (DODD) Payment rates for capital (ORC ; conforming changes in ORC , , , , and ; Sections and ) Under the bill, an ICF s fair rental value per diem is calculated by determining 9% of the sum of its land value and its depreciated current asset value. The resulting value is then divided by the greater of: 1) The number of inpatient days the ICF had, as reported on its cost report, for the immediately preceding calendar year; or 2) The number of inpatient days the ICF would have had for that calendar year if its occupancy rate had been 95%. An ICF s land value is 10% of its current asset value calculated by multiplying the ICF/IID s total square footage reported in the fair value survey information by the ICF/IID s value per square foot, then adding the result to the ICF s total equipment value. An ICF s value per square foot is determined using data published by RS Means for the calendar year in which the fiscal year begins. For ICFs/IID in peer group 1 or 2, the RS Means data for assistedsenior living facility constructions costs is to be used. For ICFs in peer group 3, 4, or 5, the RS Means data for nursing home construction costs is to be used. The precise RS Means data to be used depends on the ICF s county. An ICF s total equipment value for a fiscal year is the product of its Medicaid-certified capacity as of the first day of the fiscal year and $4,000. An ICF s depreciated current asset value is determined by first taking 1.5% of the lesser of the ICF s effective age or 40, then multiplying the result by its current asset value for the fiscal year. An ICF s effective age takes into account each renovation that costs at least $500 and is listed in the ICF s fair rental value survey information. The effective age is determined as follows: 1) For each such renovation, divide the renovation s cost and the product of the ICF s total square footage and value per square foot, as done above. 2) Determine the difference between the calendar year covered by the cost report listing the renovation and the calendar year in which the ICF s initial construction was completed, or, if unknown, the calendar year in which the ICF was initially licensed to operate. 3) Multiply each result in (1) by the result in (2) and determine the sum of all of the products. 4) Determine the difference between the calendar year in which the fiscal year begins and the calendar year in which the ICF s initial construction was completed, or if unknown, the year in which the ICF was licensed to operate. 5) Determine the difference between the result in (4) and the result in (3). Lastly, the bill makes conforming changes throughout the Ohio Revised Code to provisions referencing payments for reasonable capital costs. This includes a repeal of a provision permitting DODD, through a rate reconsideration process, to increase an ICF s rate for capital costs for the costs of adding or replacing Medicaid-certified beds. Page 10 of 25

11 (DODD) Resident assessment data (ORC ; Section ) Medicaid payment rate reconsideration (ORC ) Fiscal year 2019 Medicaid rates for ICFs/IID in peer groups 1, 2, 3, and 4 (Section ) The bill modifies a requirement that each ICF provider submit quarterly resident assessment data to DODD. The bill permits the DODD director to require that two different types of assessments be made during FY18, and the director may require that the different types be submitted at different times. Beginning in FY 2019, the bill exempts a provider from the resident assessment data submission requirement if the most recently submitted data remains accurate for each resident. The bill repeals a provision requiring the resident assessment data to include residents who are on hospital or therapeutic leave from the ICF. The bill requires the resident assessment data to include residents who are on a temporary absence that qualifies for Medicaid payments to reserve the bed during the absence. Effective July 1, 2018, the bill establishes that a change in an ICF s quarterly case-mix score of 25% or greater from the previous quarter qualifies as an extreme circumstance for which DODD may increase an ICF s payment rate. The bill also repeals a provision establishing non-extensive renovations as a qualifying extreme circumstance. The bill includes provisions governing the FY19 Medicaid payment rates for ICFs in peer groups 1, 2, 3, and 4. The provisions make modifications to the statutory formula used to determine the rates, require DODD to adjust the rates if the mean rate for the ICFs is other than a certain amount, and require DODD to reduce the rates if the federal government requires the ICF franchise permit fee to be reduced or eliminated. Modifications To Rate Formula: The bill requires DODD to modify the formula used in determining the FY19 Medicaid payment rates for existing ICFs. Under the bill, an existing ICF s FY19 Medicaid payment rate is to be determined in accordance with the statutory formula. However, an ICF s payment rate must be not less than 96.5% nor more than 103.5% of its Medicaid payment rate for ICF services provided on June 30, Adjustment To Rates For FY19: The bill requires DODD to adjust, for FY 2019, the total per Medicaid day rate for each ICF in peer group 1, 2, 3, or 4 if the mean total per Medicaid day rate for all ICFs in peer groups 1, 2, 3, and 4, weighted by May 2018 Medicaid days and determined in accordance with the modifications and limits discussed above as of July 1, 2018, is other than either of the following: 1) $ if the new ICF Medicaid payment methodology has been fully implemented not later than July 1, 2018; or 2) $ if the new methodology has not been fully implemented by July 1, DODD must adjust the total per Medicaid day rate for each ICF in group 1, 2, 3, or 4 by a percentage that is equal to the percentage by which the mean total per Medicaid day rate is greater or less than whichever amount specified in (1) or (2) applies. Page 11 of 25

12 (DODD) Quality incentive payment rates (ORC ) ICF/IID Medicaid rate workgroup (Section ) Beginning in FY2020, the bill requires DODD to determine a quality incentive payment rate add on for each qualifying ICF. To qualify for a quality incentive payment rate add on for FY20, an ICF must do the following: 3) Participate in the collection of data specified by DODD beginning January 1, 2018; 4) Submit a report of the data to DODD by June 30, 2018; and 5) Earn at least one point for meeting quality indicators established by DODD. To qualify for a quality incentive payment rate add on for FY21 and thereafter, an ICF must earn at least one point for meeting quality indicators established by DODD. The bill requires DODD to adopt rules establishing the quality indicators, the method by which ICFs earn points for meeting those indicators, and the medium through which an ICF is to submit satisfactory evidence of having met the indicators. An ICF s quality incentive payment rate add on equals the relative point value for the fiscal year multiplied by the number of quality indicator points earned by the facility for the fiscal year. The relative point value for a fiscal year is determined through the following steps. For each ICF, multiply the number of inpatient days it would have had for the reporting period if its occupancy rate had been 100% by the number of quality indicator points the facility earns for the fiscal year. Add all of the resulting products, and divide the total amount of funds available for quality incentive payments for the fiscal year by that sum. The bill requires DODD to retain the workgroup that was previously convened to assist with the implementation of a new ICF reimbursement methodology. The workgroup is to be retained to assist DODD with an evaluation of revisions to the Medicaid payment rate formula for ICF services. As part of the evaluation, DODD and the workgroup must: 1) Focus primarily on the service needs of people with complex challenges that ICFs are able to meet; and 2) Pursue the goal of reducing the Medicaid-certified capacity of individual ICFs and the total number of ICF beds in the state for the purpose of increasing the choices and community integration of people eligible for ICF services. Quality incentives have the potential to allow residents to make decisions and enhance their level of care. Page 12 of 25

13 DODD - Detailed Proposed Biennial Funding Breakdown Fund Group Fund Line Item Line Item Name FY2018 FY2019 General Revenue Fund (GRF) GRF Protective Services $2,418,196 $ 2,418,196 GRF Developmental Disabilities Facilities Lease Rental Bond Payments $ 20,323,000 $ 19,426,900 GRF Screening & Early Identification $ 300,999 $ 300,999 GRF Part C Early Intervention $ 11,109,909 $ 11,109,909 GRF Multi-System Youth $ 2,000,000 $ 2, 000,000 GRF Family Support Services $ 5,932,758 $ 5,932,758 GRF County Board Subsidies $ 44,149,280 $ 44,149,280 GRF County Board Case Management $ 2,500,000 $ 2,500,000 GRF Employment First Initiative $ 2,808,362 $ 2,808,362 GRF Community Supports and Rental Assistance $ 750,000 $ 750,000 GRF Medicaid Program Support - State $ 7,771,430 $ 7,771,430 GRF Medicaid Services $ 581,525,649 $ 601,525,649 General Revenue Fund Total: $ 681,589,583 $ 700,693,483 Dedicated Purpose Fund Group 5GEO Central Office Operating Expenses $ 14,339,487 $ 14,339,487 5QM System Transformation Supports $ 1,000,000 $ Supplement Service Trust $ 500,000 $ 500,000 5DK Capital Replacement Facilities $ 750,000 $ 750,000 5H Medicaid Repayment $ 900,000 $ 900, Developmental Centers Direct Care Services $ 10,718,092 $ 10,718,092 5EV Medicaid Program Support $ 1,500,000 $ 1,500,000 5GE ICF/IID and Waiver Match $ 38,406,616 $ 39,614,603 5S Medicaid Administration and Oversight $ 21,000,000 $ 21,000,000 5Z County Board Waiver Match $ 340,210,215 $ 374,726,690 Dedicated Purpose Fund Group Total: $ 429,324,410 $ 464,048,872 Internal Service Activity Fund Group Developmental Center and Residential Facilities Operating Services $ 17,000,000 $ 9,000,000 Internal Service Activity Fund Group Total: $ 17,000,000 $ 9,000, Community Social Service Programs $ 27,677,572 $ 27,677,572 Federal Fund Group 3A Medicaid Services $ 1,683,779,023 $ 1,751,089,044 3A Medicaid Supports $ 62,974,750 $ 62,974,750 3A Developmental Disabilities Council $ 3,324,187 $ 3,324,187 Federal Fund Group Total: $ 1,777,755,532 $ 1,846,096,748 ALL BUDGET FUND GROUPS - DODD TOTAL FY2018 $2.90 Billion FY2019 $3.01 Billion Page 13 of 25

14 DODD - Fund and Associated Line Item (ALI) Restructuring DODD is merging Medicaid-related ALIs within its federal Medicaid-Medicare Fund (Fund 3A40) to reflect its GRF Medicaid-related ALI restructuring. Medicaid-related service expenditures that were previously a part of DC & Residential Facilities Services and Support (653605), Medicaid Waiver Services (653639), ICF/ IID (653653), and CAFS MEDICAID ( )will now be paid from Medicaid Services (653654). Additionally, Medicaid-related program support expenditures that were previously part of Medicaid Waiver Program Support (653640) and DC & ICF/IID Program Support (653604) will now be paid from Medicaid Support (653655). Similarly, DODD is cleaning up its Medicaid-related DPF ALIs, as home and community based services that were previously funded from Intensive Behavioral Needs (653607) will now be funded through ICF/IID and Waiver Match (653606). The following chart illustrates changes in funding levels due to restructuring and consolidating DODD s Medicaid-related ALIs. Estimated Recommended Fund ALI ALI Name FY2017 FY2018 % Change FY2019 % Change 3A Medicaid Services $1,611,788,892 $1,683,779, % $1,751,089, % 3A ICF/IID % - 0.0% 3A DC and Residential Facilities Services and Support % - 0.0% 3G Medicaid Waiver Services % - 0.0% 3M CAFS Medicaid % - 0.0% 3A Medicaid Support $55,239,097 $62,974, % $64,005, % 3A DC and ICF/IID Program Support % - 0.0% 3G Medicaid Waiver Program Support % - 0.0% 5GE ICF/IID and Waiver Match $32,581,653 $38,406, % $39,614, % 5CT Intensive Behavioral Needs % - 0.0% DODD GRF to Non-GRF Shifts The Executive Budget development process involves a thorough review of all programs and appropriation items for both GRF and non-grf funds. A number of non-grf funds with ALIs that support programs also funded through a GRF ALI were identified to contain balances sufficient to support increased non-grf appropriations in fiscal year 2018, 2019 or both. These available balances and increased non-grf appropriation authority allowed for reductions in the associated GRF ALIs. The table below provides an overview of the programs and ALIs that were adjusted as a result of this exercise for the Department of Developmental Disabilities. State Operated Expenses Estimated Recommended Fund ALI ALI Name FY2017 FY2018 % Change FY2019 % Change GRF Medicaid Services $71,484,908 $63,000, % $69,000, % DC and Residential Facilities Services and Support $11,000,000 $17,000, % $9,000, % Total $82,484,908 $80,000, % $78,000, % $6,000,000 in GRF for Medicaid Services was shifted to non-grf funding in FY2018 only. Page 14 of 25

15 Ohio Department of Medicaid (ODM) Funding Recommendation for Fiscal Years 2018 and 2019 General Revenue Fund (GRF): Funding for fiscal year 2018 is $14.9 billion (or a 13.3% decrease from fiscal year 2017). Funding for fiscal year 2019 is $15.4 billion (or a 3.0% increase from fiscal year 2018). All Funds: Funding for fiscal year 2018 is $25.0 billion (or a 6.1% increase from fiscal year 2017). Funding for fiscal year 2019 is $25.7 billion (or a 2.8% increase from fiscal year 2018). Executive Recommendations Will Fund the Following Objectives Provide Medicaid services to over 3 million low-income people, children, pregnant women, seniors, and people with disabilities. Administer and oversee the Medicaid program that contracts with more than 90,000 active providers and six managed care plans. Work with the federal Centers for Medicare and Medicaid Services (CMS) to ensure that federally set standards and requirements are maintained and met. Support innovative strategies that will modernize the Ohio Medicaid system and improve the quality of services and health outcomes. ODM Budget Details (ODM) Revised Medicaid provider enrollment system (ORC ) The bill requires ODM to develop and implement revisions to the system by which government and private entities become and remain Medicaid providers. The revisions must be developed and implemented not later than December 31, They are to create a single system of records for the Medicaid provider system and enable government and private entities to become and remain Medicaid providers for any part of the Medicaid program, including parts administered by other state or local agencies, without having to submit duplicate data to the state. The Ohio Departments of Aging, Developmental Disabilities, and Mental Health and Addiction Services must participate in the development of the revisions and use the revised system. ODM is being given the directive and authority to develop and implement a centralized Medicaid provider system, but there is not enough information to determine what impact this will have on providers in the DD support system. OACB Stance: OACB will seek an amendment that clarifies that DODD must consult stakeholders during the design and implementation of the system to ensure provider certification concerns are properly addressed. OACB needs to ensure there is adequate board of DD representation on any group tasked with developing criteria for implementation. Page 15 of 25

16 (ODM) State plan home- and communitybased services (ORC with conforming changes in ORC ; Section ) Medicaid payment limits for noninstitutional providers (ORC ) The bill permits the Medicaid program to continue to cover one or more state plan home- and community-based services (HCBS). This authority currently expires July 1, These services are optional under federal law and, unlike the other HCBS the Medicaid program covers, do not require a federal waiver. To make this authority ongoing, the bill codifies it. The bill also makes revisions. The codification and revisions take effect the 91st day after the bill is filed with the secretary of state. Until then, the bill permits the Medicaid program to continue to cover the state plan services in the same manner as it did in fiscal years 2016 and Under the bill s revisions, ODM is to select which state plan HCBS the Medicaid program is to cover. The bill eliminates a provision prohibiting Medicaid payments for services provided by a non-institutional provider from exceeding the payment limits for the same services under Medicare. For purposes of this provision, a non-institutional provider is a Medicaid provider other than a hospital, nursing facility, or ICF. This is a continuation of a current process. This provision may result in an increase in total payments for services to non-institutional providers. Page 16 of 25

17 (Department of Taxation) Medicaid provider sales tax cessation and transition payments (Section ) School district income tax in consolidated districts (ORC and ) Ohio Department of Taxation Budget Details The bill provides payments to counties and transit authorities in November 2017 to mitigate their sales tax revenue loss from the cessation of all sales tax on Medicaid managed care services provided by health insuring corporations (MHICs or Medicaid MCOs) under contracts with the state. The one-time payment is intended to cover the entire local tax loss for those counties and transit authorities for the fourth quarter of calendar year 2017 and some of the loss thereafter. The amount each county and transit authority receives for the post loss is computed on the basis of its historical MHIC sales tax revenue, per-capita non-mhic sales tax revenue, and a factor stipulated to adjust for its fiscal capacity to absorb the loss. The termination of sales tax on such services is implied by federal approval, in December 2016, of the state s request for a waiver from broad-based and uniformity requirements for other MCO taxes, described elsewhere in this analysis, that are intended to replace the sales tax on those services. States must follow those requirements when providing their share of Medicaid funding through taxation of MCOs. Ohio s replacement taxes terminate the need for the sales tax on MCO services, which has been in jeopardy because of its apparent failure to comply with the uniformity requirements of federal law. Continuing law prescribes various procedures by which some or all of the territory of a school district may be merged or joined with or transferred to another school district. The bill specifies that, following a school district consolidation; school district income tax is levied throughout the combined district s territory at the rate and according to the other terms in effect for the surviving school district gaining the territory. Current law does not explicitly prescribe the manner in which existing school district income taxes apply after a school district consolidation. The bill also requires the school board of the surviving school district to report certain tax-related information to the Tax Commissioner within 90 days before a school district consolidation takes effect. Specifically, the school board is required to identify that effective date and each school district that is a party to the consolidation, including the rate of income tax levied by each district after that effective date, if any. The current provision, if left unchanged, will significantly reduce funding for counties. While there is no direct fiscal impact to county boards of DD, there is a potential for down stream impact on boards if counties are operating with less revenue. This could cause difficult scenarios for county board levies. Page 17 of 25

18 (Department of Taxation) Property taxation multicounty health district taxing authority (ORC and ) Local Government Fund (ORC , , , , , and (amended); ORC and (enacted); Sections to , and ) The bill authorizes a multi-county health district board to propose a property tax levy to pay for the district s expenses. The board may submit the levy proposal directly to the voters of the district. Continuing law allows the creation of general health districts (townships and villages), city health districts, and combined health districts. Combined health districts may be comprised of townships and municipalities within a single county ( county health districts ) or multiple counties. Under current law, only a single-county combined district may levy its own property taxes, via the county s board of commissioners. General and city health districts may not separately levy property taxes, but receive tax revenue from their constituent political subdivisions. The bill allows a multi-county health district to also levy its own property taxes. The district s board of health may propose such a levy and submit the levy question to all of the voters in the district. The bill modifies the formula that directs how money in the local government fund (LGF) is distributed to local governments. Under continuing law, the LGF receives 1.66% of the total state tax revenue credited to the general revenue fund each month. Most of these funds are distributed to county undivided local government funds (county LGFs) in every county in the state. Local governments in the county agree on how money in the county LGF is allocated among the various political subdivisions within the county. In a few counties, a default statutory formula determines the allocation. About 2.5% of the LGF is distributed directly to about 540 municipal corporations. Under current law, distributions to county LGFs and municipal corporations general funds are calculated using a two-step formula. The first step is determining each fund s proportionate share of the total amount distributed from the LGF in For direct distributions to municipal corporations, no further adjustment is made. However, for distributions to county LGFs, the proportionate share allocated to each county must be adjusted to ensure that every county receives at least the lesser of (a) $750,000 or (b) the amount the county received in FY The proportionate shares of county LGFs that would otherwise receive less than this minimum distribution (about 20 counties) are increased upward, while the proportionate shares of all other county LGFs are reduced accordingly. Page 18 of 25

19 (Department of Taxation) Property tax base reductions and school funding recomputations (ORC , , , , Repealed: , ) Repeals two provisions enabling school districts to have their state funding recomputed to reflect reductions in the district s property tax base that become known after the funding initially was computed. Retains a recomputation for reductions in public utility tangible personal property of 5% or more. The repealed recomputations are for property value reductions causing tax refunds of more than 3% of a district s current expense tax revenue and for property value reductions arising from property owner complaints, late current agricultural use value (CAUV) determinations, and retroactive tax exemptions. A recomputation for reductions in public utility tangible personal property of 5% or more would remain in place (ORC ). In recent years, the school funding formula uses a district s threeyear average valuation in its calculations. The adjustment payments from R.C and have not been significant. Page 19 of 25

20 (ODE) Ohio Department of Education (ODE) Budget Details Special education funding (ORC ) The bill maintains the dollar amounts for the six categories of special education services from FY17 for both FY18 and FY19, as described in the table below. These amounts are used in the calculation of special education funding for city, local, and exempted village school districts, joint vocational school districts, community schools, and STEM schools. Maintaining current levels of funding may be a positive outcome in this budget. OACB Stance: Support Category Disability Area Speech and language disability Specific learning disabilities; developmental disabilities; other health impairment minor; preschool child who is developmentally delayed Hearing disabled, severe behavior disabled Vision impaired; other health-impairment major Orthopedically disabled; multiple disabilities Autism; traumatic brain injuries; both visually and hearing impaired Dollar Amount for FY18/19 $1,578 $4,005 $9,622 $12,841 $17,390 $25,637 School district TPP reimbursement (Repealed ORC and ) The bill repeals sections of the existing school funding law that prescribe the calculation of school districts capacity measures for the tangible personal property (TPP) reimbursement in the tax code. These calculations were performed once, in FY 2016, for purposes of the TPP reimbursement. Page 20 of 25

21 Ohio Department of Job and Family Services (JFS) Budget Details (JFS) Disability Financial Assistance Program (Section with conforming changes in numerous Ohio Revised Code sections; repealed Chapter 5115.) The bill eliminates the Disability Financial Assistance Program, a JFS program providing monthly cash benefits to low-income people with disabilities who do not satisfy eligibility requirements for other state or federal assistance programs, including Ohio Works First and supplemental security income. The program will expire December 31, The bill preserves, until July 1, 2019, the authority of the department, or a county department at the department s request, to take any action to recover erroneous payments, including filing a lawsuit. Erroneous payments are defined to include disability financial assistance payments made to a person who is not entitled to receive them, including payments made as a result of misrepresentation or fraud and payments made due to an error by the recipient or the county department. The Disability Financial Assistance Program provides monthly cash benefits to low-income people with disabilities who do not satisfy eligibility requirements for other state or federal assistance programs, including Ohio Works First and supplemental security income. Page 21 of 25

22 (ODH) New Office of Health Transformation program Bureau for Children with Medical Handicaps (BCMH) Ohio Department of Health (ODH) Budget Details Beginning December 31, 2017, the bill requires the executive director of the Governor s Office of Health Transformation, in cooperation with directors of the Ohio Departments of Job and Family Services and Mental Health and Addiction Services, the Medicaid director, and the Executive director of the Opportunities for Ohioans with Disabilities Agency, to ensure the establishment of a program to do both of the following: 1) Refer adult Medicaid recipients who have been assessed to have health conditions to employment readiness or vocational rehabilitation services; 2) Assist adult Medicaid recipients who have been assessed to have disabling health conditions to expedite applications for supplemental security income or social security disability insurance benefits. The Program for Medically Handicapped Children provides assistance to Ohio residents who are under the age of 21, have special health care needs, and meet medical and financial eligibility criteria. The program is administered by the Bureau for Children with Medical Handicaps in ODH. That is why the program is commonly referred to as BCMH. BCMH has three core components: 1) Diagnostic Children under age 21 can receive services from BCMH- approved providers for three months to diagnose or rule out a special health care need or to establish a plan of treatment. Currently, there are no financial eligibility requirements for this component. 2) Treatment Children under age 21 with eligible health conditions can receive services from BCMH-approved providers for treatment of a chronic, physically disabling condition that is amenable to treatment. Children and their families must meet medical and financial eligibility requirements to qualify for this component. 3) Service coordination This component helps families locate and coordinate services for their child. It is currently available for a limited number of diagnoses; to be eligible, a child must be under the care of a multidisciplinary team at a BCMHapproved center. Financial eligibility is not required for this component. This provision transfers the BCMH program to Department of Medicaid and transitions the benefit from fee-for-service to Medicaid managed care. While some populations will be required to transition the new managed care model immediately, other populations will not. Those populations that are not required to transition immediately will either transition over time or will eventually age out of the program. For people with developmental disabilities on waivers, they will have the option to continue with the current program or transition to the new managed care model. Page 22 of 25